Wall Street Now Home To American Indian Firm
American Indians have become major players in the casino business. Now one tribe from South Dakota is moving into a different kind of gambling — on Wall Street.
The Lower Brule Sioux tribe, based in Lower Brule, S.D., just bought the Westrock Group, making the company the first fully Native American-owned investment firm.
As a result, Westrock, which brought in $22 million in profits last year, is also gaining another advantage: As a tribal business, it won't have to pay federal income tax.
Advantages Of Tribal Ownership
At first, Don Hunter, Westrock's chief executive officer, didn't want to sell the company.
"When someone told me it was a minority business — and that it was even a Native American business — it really made a lot more sense," Hunter says.
He says tribal ownership also provides another major advantage — access to a new pool of money. State pension funds, college endowments and other government contractors have rules that require a part of their money to be invested through minority-owned firms.
Hunter says this requirement gives Westrock thousands of potential new clients.
"The growth of the company could be exponential compared to what it would have been if we were just doing it on our own," Hunter says.
A Boost For A Rural Economy
The Lower Brule Sioux Tribe bought this firm to boost its economy in rural South Dakota. The tribe runs the Golden Buffalo Casino in Lower Brule, but it's in the middle of the state — many miles from any large population center. That means there are few gamblers to keep the casino profitable. So, rather than rely on gambling for its revenue, the tribe decided to turn its attention to Wall Street.
The tribe is also very poor and is struggling with 40 percent unemployment. Tribal Chairman Mike Jandreau says the Wall Street venture will help build education, infrastructure and jobs.
"The constant reliance on the federal government has not been in the best interest of the tribe," Jandreau says. So, he says, the members of the tribe "must find new and innovative ways to take care of ourselves."
A Transparency Dispute
But the tribe won't disclose how much money will come back to it or exactly how that money will be spent. Vicki Her Many Horses, a member of the tribe, is critical of this lack of transparency. She wants to know where Jandreau got the money to buy this firm, and how much he paid — two items the tribal government won't divulge.
"If you look at a tribe as a corporation, we're shareholders. Every one of us has a single share in this tribe," Her Many Horses says. "He has no more right than we do to know what's going on with our assets. Because we're all going to be gone one day and it's going to be our kids who are left standing here and wondering what the heck did they get us into."
The tribe insists that the level of transparency here is the same as it would be for any other business.
The tribe's acquisition is also historic because there's a long-standing connection between American Indians and New York's financial district. Wall Street is named after a defensive wall that was built by early Dutch settlers in Manhattan in order to keep American Indians out. Over 350 years later, the Lower Brule tribe has broken down that wall. Now it has to prove to investors that it can succeed.
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STEVE INSKEEP, host:
We have another financial venture to tell you about this morning. Native American tribes are major players in the casino business, and one tribe in South Dakota is moving into a different kind of gambling.
The Lower Brule Sioux tribe just bought a New York firm called the Westrock Group, creating the first fully Native-owned investment firm.
South Dakota Public Broadcasting's Charles Michael Ray reports.
CHARLES MICHAEL RAY: So I'm sitting in the Lower Brule tribal casino right now. It's pretty quiet. That's because there's really no one gambling here. This casino is in the middle of South Dakota. There's no real large population centers around here to bring in people to gamble, so rather than relying on this for revenue
(Soundbite of slot machine)
RAY: the tribe is banking on this.
(Soundbite of bell)
RAY: The closing bell on Wall Street sounds a bit like a slot machine. The comparison between gambling and investing is obvious these days, but there's more to this. It turns out that being owned by Native Americans is an advantage on Wall Street. Now that the Westrock Group is a tribal business, it doesnt pay taxes.
Westrock brought in $22 million in profits last year. Now it's free of federal income tax. The tribe is keeping on Westrock's CEO, Don Hunter. At first he didnt want to sell the company, but
Mr. DON HUNTER (CEO, Westrock Group): When someone told me it was a minority business - and that it was even a Native American business - it really made a lot more sense.
RAY: Hunter says a major advantage of tribal ownership is access to a new pool of money. State pension funds, college endowments and other government contractors have rules that require part of their money to be invested through minority-owned firms. Hunter says this requirement gives Westrock thousands of potential new clients.
Mr. HUNTER: The growth of the company could be exponential compared to what it would've been if we were just doing it on our own.
RAY: The Lower Brule Sioux Tribe bought this firm to boost its own economy. The tribe is very poor. It's struggling with 40 percent unemployment. Tribal Chairman Mike Jandreau says this venture on Wall Street will help build education, infrastructure and jobs.
Mr. MIKE JANDREAU (Tribal Chairman, Lower Brule Sioux Tribe): The constant reliance on the federal government has not been in the best interest of the tribe. And so therefore what we find ourselves dealing with is the fact that we must find new and innovative ways to take care of ourselves.
RAY: But how much money will come back to the tribe and exactly how it will be spent is under wraps.
Vicki Her Many Horses is a tribal resident who is critical of the lack of transparency. She wants to know where Chairman Jandreau got the money to buy this firm and how much he paid - two items the tribal government won't divulge.
Ms. VICKI HER MANY HORSES: If you look at a tribe as a corporation, we're shareholders. Every one of us has a single share in this tribe. He has no more right than we do to know what's going on with our assets. Because we're all going to be gone one day and it's going to be our kids who are left standing here and wondering what the heck did they get us into.
RAY: The tribe insists that the level of transparency here is the same as it would be for any other business.
There is an historic connection between Native Americans and New York's financial district. Wall Street is named after a defensive wall that was built by early Dutch settlers in Manhattan in order to keep Native Americans out. Over 350 years later, the Lower Brule tribe has broken down that wall. Now it has to prove to investors it can succeed.
For NPR News, I'm Charles Michael Ray in Rapid City, South Dakota. Transcript provided by NPR, Copyright National Public Radio.
